The firms Group First and RSC have been transferred to the ownership of Pivotal Growth, which is a joint venture between LSL and Pollen Street Capital.
Pivotal Growth launched in 2021 and has since acquired a number of mortgage broker firms as part of its strategy to become a ‘buy and build’ national mortgage broker.
The consideration payable is the combined EBDITA of Group First and RSC in the calendar year of 2024, multiplied by seven. This is capped at a maximum value of £20m.
The consideration will be payable in cash to LSL during H1 2025, and LSL will consider the most effective use of the funds.
LSL holds a 47.8 per cent share in Pivotal Growth and will continue to account for this going forward. This will include the profits generated by Group First and RSC.
LSL said it disposed of the firms to simplify the group and focus on its financial services network division. It also said Pivotal Growth would be better placed to increase the value of the sold off firms.
A strategic decision
David Stewart, chief executive of LSL, said: “The transfer of Group First and RSC represents an important step in the execution of our strategy and in the development of Pivotal Growth. Financial services is at the heart of the group’s growth strategy where we have identified significant opportunities to develop LSL’s position as the leading provider of services to independent mortgage brokers.
“These transactions help to simplify the group structure to allow us to focus on maximising these business-to-business opportunities, whilst also reducing exposure to housing market cycles. Pivotal Growth was established in 2021 to exploit the opportunities we had identified in the direct-to-consumer mortgage broking market, and growth in the new build sector is a strategic focus for Pivotal Growth.”
Simon Embley, chief executive of Pivotal Growth, added: “I am delighted to welcome RSC and Group First into the Pivotal Growth group and to start the year with the strong momentum of two acquisitions. Through investment in their people, systems and technology, we plan to organically grow these businesses to further cement our position as a leading player in the new homes market, where we will continue to explore opportunities in the future.”
For the financial year 2021, Group First reported a profit of £1.4m while RSC posted a profit of £700,000. The combined profits of the firms are expected to be £700,000, and LSL said the impact of the disposals would “not be material” to the group.
Alison Winterburn, managing director of RSC, said: “This is a great opportunity to work with Simon and his team at Pivotal Growth which will bring us new distribution opportunities and access to technology in order to grow the business.”
Ian Bush, managing director at Group First, added: “We are very excited at the prospect of becoming part of the Pivotal Growth group which will help us build on our relationships with new build developers.”
